Hot Things
The Rapid Adoption of Generative AI
Alexander Bick, Adam Blandin & David Deming
NBER Working Paper, September 2024
Abstract:
Generative Artificial Intelligence (AI) is a potentially important new technology, but its impact on the economy depends on the speed and intensity of adoption. This paper reports results from the first nationally representative U.S. survey of generative AI adoption at work and at home. In August 2024, 39 percent of the U.S. population age 18-64 used generative AI. More than 24 percent of workers used it at least once in the week prior to being surveyed, and nearly one in nine used it every workday. Historical data on usage and mass-market product launches suggest that U.S. adoption of generative AI has been faster than adoption of the personal computer and the internet. Generative AI is a general purpose technology, in the sense that it is used in a wide range of occupations and job tasks at work and at home.
People Believe If 90% Prefer A over B, A Must Be Much Better than B. Are They Wrong?
Graham Overton, Joachim Vosgerau & Ioannis Evangelidis
Journal of Consumer Research, forthcoming
Abstract:
We show that consumers confuse consensus information in polls -- such as 90% prefer product A over product B -- with differences in liking -- the extent to which poll respondents like A better than B. Consequently, they interpret a 90% consensus in favor of A as the average liking of A being considerably higher than the average liking of B. We demonstrate empirically and with simulations that -- while this can be true -- it is more probable that the average liking of A is only slightly higher than that of B. This regularity is robust to the sign and size of the correlation between ratings for A and B, and across most distributions for A and B's liking. Consumers are not aware of this regularity, and believe that 90% consensus implies A being much better than B. Communicators (marketers, managers, public policy makers, etc) can capitalize on these erroneous inferences and strategically display preference information as consensus or as liking ratings leading to dramatic shifts in choices. Consumers' erroneous inferences can be corrected by educating them about the shape of the distribution of liking differences. We discuss theoretical and managerial implications for the understanding and usage of polls.
Perceived Naturalness Biases Objective Behavior in Both Trivial and Meaningful Contexts
Brian Meier et al.
Social Psychological and Personality Science, forthcoming
Abstract:
Research shows that perceived naturalness can bias beliefs about the positivity of items such as food, human talent, and vaccines. Yet, this research focuses on self-reports, which leaves open the implications it has for behavior. In four studies (N = 492), we tested if perceived naturalness impacts trivial and meaningful behaviors. Participants were asked to consume a purported natural/synthetic performance drink (Study 1), test a purported natural/synthetic drug that would be injected (Study 2), eat chocolate containing a purported natural/synthetic cocoa described as causing stomach discomfort (Study 3), or choose a sticker purportedly made with natural/synthetic ink (Study 4). A significant majority of participants (66%-84%) chose and followed through with the natural versus synthetic option. Perceived naturalness guided behavior in contexts involving little (sticker choice) to substantial (drug injection) potential consequences. Self-reports can weakly predict behaviors, but the results revealed that perceived naturalness biases self-reports and behaviors in a similar fashion.
Style over substance? Advertising, innovation, and endogenous market structure
Laurent Cavenaile et al.
Journal of Monetary Economics, forthcoming
Abstract:
While firms use both innovation and advertising to boost profits, markups, and market shares, their broader social implications vary substantially. We study their interaction and analyze their implications for competition, industry dynamics, growth, and welfare. We develop an oligopolistic general-equilibrium growth model with firm heterogeneity. Market structure is endogenous, and firms' production, innovation, and advertising decisions interact strategically. We find advertising reduces static misallocation, but also depresses growth through a substitution effect with R&D. Although advertising is found to be socially useful, taxing it could simultaneously increase dynamic efficiency, contain excessive advertising spending, and raise revenue, while still reducing misallocation.
Brand Teasing: How Brands Build Strong Relationships by Making Fun of Their Consumers
Demi Oba, Holly Howe & Gavan Fitzsimons
Journal of Consumer Research, forthcoming
Abstract:
Popular brands like Wendy's, Postmates, and RyanAir have gained notoriety by making fun of their consumers, but is this an effective strategy to build strong consumer relationships? Across eleven (seven pre-registered) studies, using lab data, field data, and a variety of analytical approaches, the current research demonstrates that teasing communication increases consumer engagement with and connection to the brand compared to merely funny or neutral communication. These effects occur because consumers anthropomorphize brands more when they use teasing communication. This leads to greater engagement with brand messages and greater self-brand connection. We also leverage the interpersonal teasing literature to distinguish between prosocial and antisocial teases and highlight an important boundary condition. Specifically, we demonstrate that while prosocial teasing evokes a positive human schema, antisocial teasing, although still anthropomorphic, activates a negative human schema which reduces connection to the brand. As a result, antisocial teases lose their relational advantage over purely funny communication. This work contributes to the streams of research on brand humor, anthropomorphism, and consumer-brand relationships. It also provides actionable implications by demonstrating a novel antecedent to consumer brand connection and the boundaries within which these positive effects are expected to occur.
Theme park rides are Giffen goods
Garth Heutel
Southern Economic Journal, forthcoming
Abstract:
Using a unique proprietary data set on the behavior of guests visiting theme parks, I document evidence for Giffen behavior in the demand for theme park rides. On average, when the price of a ride increases, that is, the wait time increases, then the probability of riding it increases. This relationship arises predominantly among demand for the least-desirable rides, it arises predominantly in the theme parks with the fewest number of substitute rides, and it is robust to controlling for expectations of future wait times and other sensitivity analyses. These patterns are all consistent with Giffen behavior.